legal problems with going bankrupt

Legal Problems With Going Bankrupt

http://nichollsco.com.au

Hello, I’m Alan Nicholls and I’m a Registered Bankruptcy Trustee,Company Liquidator, and a Chartered Accountant. So that you canhave the chance to read some right information, I’d like to tell youabout bankruptcy frommy perspective.

People tell me every day that they want to pay their debts, but justcan’t.

They tell me that they’ve tried to keep up with the minimumrepayments required, they’ve talked to their creditors to see whatother relief was available, they’ve accepted whatever period of gracewas offered to enable them to get themselves into better shape, andthey’ve tried and tried and tried and tried and are getting nowhere.

In a lot of cases their circumstances have just changed, and that’swhy they are now in debt.

So, I very often recommend to them that they consider declaringthemselves bankrupt. I tell them that bankruptcy will give them thechance to start a new life, in most cases completely debt free, andthat if they wish, they can start this new life…..now.



What Happens Once You Become Bankrupt?

By becoming bankrupt, and it can generally happen within about10-14 days, you’ll first get a Bankruptcy Trustee. Perhaps you’ll chooseme. We’ll go into that if you ask.

Almost all of your debts, and most times it is all of your debts andliabilities (in the language of a Bankruptcy Trustee they are known asprovable debts), simply then become owing by your bankrupt estate,not by you anymore, so you become debt free or almost debt free.

The exceptions are monies owing to Centrelink, Child Support, HECSDebt, and what are known as Court Imposed Fines, and finally, debtincurred by Fraud.

And if you want to keep an asset that is allowed, like a car, and lateron we’ll talk about your house too, then of course you must continueto pay for it. This sort of debt is called Secured Debt.

I’ll explain what happens to them shortly, right now I want to tell youwhat happens to the majority of debt that I come across like creditcard debt, tax debt, store card debt, phone debt, personal loan debt,and the like. It’s called unsecured debt, and it’s the easy to get deadend sort of debt that burdens people the most.

When you go bankrupt this sort of debt is simplycancelled immediately as far as you are concerned, you personally



don’t owe it anymore, and never will, as it simply becomes debtowing by your bankrupt estate, and over the next three years it issorted out by your Registered Bankruptcy Trustee. But let me stress,because I sometimes hear that you’ve been told otherwise, from day1, as soon as you become bankrupt, you do not owe it any more.

If you have been paying any of this sort of debt by direct debits fromyour bank account, go to the bank and cancel these arrangements.

This is an extremely important point to note and digest as with boththe alternatives to bankruptcy, notably Debt Agreements andPersonal Insolvency Agreements you are not released from yourdebts until the final repayment instalment is made. Often time withDebt Agreements that could be 5 years down the track, or longer.

That is too long for most people and their families to stay in debt andto be broke and miserable.

Once the bankruptcy is in place then your bankruptcy number anddate of bankruptcy are recorded on the government’s databasewhich is known as the National Personal Insolvency Index, the NPII.You are there forever and it is a public document and accessible bypayment of a fee. Only on rare occasions do I hear of it beingaccessed.

You get an important black mark on the database of the commercialcredit rating agencies, and it’s there for 5 years. That’s the credit



rating to worry about. This is the one where a lot of the people whoring me up are already listed as having bad credit risk.

Once you are bankrupt your bankruptcy trustee will write to allcreditors (and your present bank) to let them know of yourbankruptcy and to ask them to contact his office regarding thelikelihood of your debt being repaid. Your Bankruptcy Trustee canthen provide them with some certainty about their prospects of thishappening.

Once you’ve gone bankrupt your creditors are not to contact youagain by phone, letter or a knock on your door about this debt, andthey can’t reappear again in 3 years’ time.

Your bankruptcy is not advertised in a newspaper.

Once you become bankrupt your trustee will move to secure anyassets that can now be part of your bankrupt estate, and he/she willcommence administering the bankrupt estate.

You can now start putting the stresses and uncertainty of beingunable to repay your debts behind you, and so now get on with life.

There are other options apart from bankruptcy that are available toyou and these are outlined further on in this website, but in mostcases it is my opinion that bankruptcy provides you with the neatestand most effective solution, as bankruptcy provides an immediate



release from the liabilities, and most importantly, it simply recognisesthat we are all human beings.

Bankruptcy also provides you with the opportunity to earn aminimum level of cash in hand income, which is always over $1,000 aweek, and to be able to keep certain property so as to ensure thatyou can live fully.

Once a person gains the protection of bankruptcy they can changetheir focus towards regrouping, living their life and recovering fromthe trauma of extreme financial distress. I’ve seen a happy andproductive life happen again. People are able to regain theirself-esteem.

The Bankruptcy Option explained.

The purpose of the Bankruptcy Act is to provide a legitimate humanesolution for persons who are unable to pay their debts, withoutregard as to whether the debts are business or personal.

Thousands of what could be generally termed ordinary peoplechoose to utilise bankruptcy every year. You don’t have to be inbusiness to declare yourself bankrupt, unresolvable debt does notdiscriminate. It can impact anyone without regard for whether theyare or are not in business, the type of work they do or where theylive.



Debt can also be caused by a relationship breakdown, unemploymentor under-employment, sickness, a business failure, debt as the resultof a personal guarantee, an act of nature, structural change within anindustry, and whether you’ll admit it or not, sometimes by excessivepersonal expenditure.

There would be others as well but these are the main ones that I see.I just wanted you to know that a bankruptcy claim works the sameway, regardless of the reason.If you’d like to talk to me about bankruptcy and where it sits with youthen call me on 1300 676 998 or send me an emailat [email protected] Also, save mywebsite www.nichollsco.com.au so that you can come back and readmuch more, not only about bankruptcy.

Another excellent hands on bankruptcy website, with videos, hasbeen mostly written by Fred Appleton, a former CharteredAccountant who has been through the bankruptcy process himselfwhen he didn’t get paid, is at www.fredappleton.com.au

I recommend that you go there and read it at some stage. Fred is nota Registered Bankruptcy Trustee, but together with his son Steve, aswell as talking to people about bankruptcy, his office preparesclients’ bankruptcy paperwork using an all email system designed byFred. Nicholls & Co does not do this paperwork.

Sometimes there is confusion about businesses going“bankrupt”. Only individuals can claim bankruptcy.

mailto:[email protected]

http://www.nichollsco.com.au/

http://www.fredappleton.com.au/



There is a different set of laws and procedures if a Pty Limited or aLimited company is unable to pay their debts, they mostly go intoLiquidation. (I am also a Registered Company Liquidator)

If a director has signed a personal guarantee and they later cannothonour that guarantee then this debt will be cancelled on thebankruptcy of that director, and so life can go on.

How does a person become bankrupt?

To obtain the protection of bankruptcy you must fill out 2 forms, a Debtor’sPetition and a Statement of Affairs. If you think that you would feelcomfortable and able to correctly fill in these forms yourself then they canbe downloaded from www.afsa.gov.au

Contact Us :

Nicholls & Co.E-mail : [email protected]

http://www.afsa.gov.au/

mailto:[email protected]

legal problems with going bankrupt

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